Ducking CAG bouncers

Some months ago, when the first draft of the Comptroller and AuditorGeneral's (CAG) report on allocation of coal blocks came into the publicdomain, the Coal Minister Mr.Sriprakash Jaiswal tried to dismiss theauditor's findings as "notional and imaginary".

As is his wont, the Prime Minister Mr.Manmohan Singh ducked the bouncers forsome time but eventually spoke up. He too was dismissive of the CAG'sfindings as "uninformed allegations". However, now that the CAG Report hasbeen tabled in parliament, the "uninformed allegations" have become informedopinion of a constitutional authority and the government is running forcover.

The CAG's findings on allocation of coal blocks constitutes the most damningindictment of a government. The auditor says the government adopted anon-transparent allotment process that resulted in undue gains amounting toRs 1.86 lakh crore to private parties. This conclusion of the CAG makesCoalgate the biggest scam in India's history, but what does the man whopresides over the government have to say? He says silence is better than athousand replies! He is wrong, because of three reasons: India is ademocracy and you have to explain your conduct, however high you may be; ashead of government, Mr.Singh must take responsibility and explain why hisgovernment did what it did; and finally, the Coal Ministry was under hisdirect charge for some of the years when this non-transparent approach wasadopted to give away a valuable natural resource resource to privatecompanies without competitive bidding.

Following the leak of the draft report earlier this year, Team Anna demandedan independent probe into the sale of these coal blocks.

Since the Department of Coal was under the direct charge of the PrimeMinister for three years between 2006-09, Anna & Co accused Mr.ManmohanSingh of having abused his position to help private parties. Thus, the draftreport of the CAG had for the first time resulted in corruption chargesbeing hurled at the Prime Minister. The carefully cultivated "Mr.Clean"image of Mr.Singh was being seriously challenged for the first time.

When the report was tabled last week, Finance Minister P.Chidambaram offeredthe first official reaction from the government. He said the "presumptiveloss" in the CAG Report was flawed. "If coal is not mined, if it remainsburied in mother earth, where is the loss. The loss can arise only once thecoal is taken out of mother earth, mined and sold at unacceptable price orvalue. But if the coal is not mined, where is the loss," he said. Does thisnot amount to saying there is no loss to the public exchequer? However, whenhis "zero loss" theory became a matter of public ridicule, he claimed thathis statement of the previous day did not amount to saying that there waszero loss.

He, as is his wont, blamed the media for distorting his statement.

The Prime Minister too is trying to obfuscate the facts. The CAG has faultedthe government for not taking the competitive bidding route.The sequence of events is as follows: The Secretary (Coal) recommendedcompetitive bidding in June, 2004 and even warned that if this was not done,private parties would make "windfall gains". Further, the Law Ministryopined in 2006 that the government should introduce competitive bidding. Butthe government continued the ad-hoc process until 2012. The Prime Ministerconcedes the point and says the Department of Legal Affairs did say inAugust, 2006 that competitive bidding "could be introduced throughadministrative instructions". But the government never introduced atransparent bidding process. After conducting itself in a manner detrimentalto public interest, the government now accuses the CAG of selectivelyreading the documents, implying thereby that this constitutional authorityhas some axe to grind. The Prime Minister claims that the CAG's conclusionsare "disputable". This is unacceptable. Even more laughable is his impliedclaim that he ought to be complimented for trying (from 2004 to 2012) tobring in a legislative amendment to enable competitive bidding. Instead,there is "adverse audit scrutiny", he says.

The report's Executive Summary contains one paragraph which constitutes adamning indictment of the selection process. It exposes the complete lack oftransparency in the allocation of coal blocks to private parties. The CAGsays the Screening Committee recommended the allocation of a coal block to aparticular allottee out of all the applicants for that coal block, as perthe minutes of the committee's meeting. "However, there was nothing onrecord in the said minutes or in other documents on any comparativeevaluation of the applicants for a coal block which was relied upon by theScreening Committee. Minutes of the Screening Committee did not indicate howeach one of the applicants for a particular coal block was evaluated. Thus,a transparent method for allocation of coal blocks was not followed by theScreening Committee". This is indeed shocking, because a comparativeanalysis of the merits and demerits of every candidate is done and make partof the record even in the appointment of peons in government. But, thegovernment has nothing on record to show why it chose a particular party fora coal block in preference to other applicants. There is only deafeningsilence from the government on this conclusion of the CAG. Needless to saythat both the Prime Minister and the Finance Minister have no explanation tooffer for such gross misuse of governmental authority while allocating aprecious natural resource.

We get another peek into the "efficiency" of this government when thereport talks about the system of bank guarantees introduced by the CoalMinistry to ensure timely production from the coal blocks. The ministryde-allocated 24 blocks up to June, 2011 for lack of progress.

The Monitoring Committee also recommended deduction of Bank Guarantee givenby 15 allottees for delay in development of coal blocks.

However, the ministry "could not" encash the bank guarantees "as themodalities for such encashment were still to be worked out". As of November,2011, lapsed bank guarantees amounted to Rs 312 crore. Is it not strangethat some private parties are first favoured with coal blocks in the mostnon-transparent system of allocations. Thereafter, when they default, thegovernment seems to baulk at the idea of encashing their bank guarantees.Why? Here again the government has no explanation to offer as to why ittreated the defaulters with kid gloves and why it did not encash bankguarantees.

The Prime Minister's response is full of contradictions. He offers adetailed response to the CAG's findings in his statement which runs to32 paragraphs. Yet, he makes this lofty declaration: "Hazaron jawabon seachchi hai khamoshi meri.....". If silence is better than response to athousand questions, why did you offer such a detailed response?

Secondly, Mr.Singh, the choice of the Shair is totally inappropriate in theIndian context. The Prime Minister of the largest democracy in the worldcannot and does not have the luxury of not responding to questions. This isa Shair that is fit for some one like Kim Jong-un, the Stalinist dictator ofNorth Korea! As they say, if you cannot take the heat, you must get out ofthe kitchen.